While condo prices at Insignia haven’t been set, Bosa said, “they’ll be more than you can buy anything [downtown] for now.”

More than anything that’s for sale right now? Yikes. One of the biggest criticisms of the current batch of condos has been that the developers are only catering to the luxury market. If you’re a middle-class family hoping to live downtown, as far as developers care, you can take a hike.

If you’ve been in the market for a 2-bedroom new construction condo downtown in the last few years, you’ve basically had three choices:

Working backwards using my affordability calculator, to “afford” the cheapest 2-bedroom condo downtown a family would have to have $87,000 available for a down payment and a bare minimum yearly income of $116,000. To “afford” the median they’d need $167,000 in the bank and at least a yearly income of $195,000.

[Update: The affordability numbers above originally did not include the cost of HOA dues. The post has been updated to reflect the inclusion of monthly HOA dues.]

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

And why are rents so high? Because we have such a limited zoning system that the few places you can build up skyrocket in land value. Want affordable housing? Upzone, upzone, upzone. Supply, meet demand.

Believe it or not, even a project this extravagant will lower the median home price in Seattle. As the rich move up, they leave empty supply for the less rich behind them.

Let’s hope these price tags come with parking for at least one car too. I’m guessing from Tim’s picture, the parking is extra.

The buyers probably enjoy just walking to their downtown job; while school availability, parking and grocery stores are a moot point for this elite crowd. They’re probably DINKS and eat out a lot anyway, they can get by with taxis and such. I wonder how many of them actually ride bikes?

Speaking of “dirty secrets” that the EPA seems to be sweeping under the rug in 2010 and 2011 in the name of “Super Tankers” world trade spewing pollutants into Seattle’s waterfront air; the data is masked [look it up, its blank]. Years ago I saw the arsenic concentrations in newspapers in King County….let’s put it this way, the closer to the waterfront the worse it gets from what I saw mapped out. And yes, the arsenic in King County exceeds the “safe” threshold too. You might want to glass in your deck on the waterfront and filter the air, unless you’re the “trusting sort”.

Given the development cost of a high rise, is it even realistic to expect “affordable” downtown condos? Escala is asking in the ballpark of $400/sq ft for the 2 BR condos, what’s the lowest cost one could really expect? $300?

$50M to buy the property, $200M to build the tower… let’s say you make a cheaper tower that’s $150M, so $200M total… and something like 600,000 sq ft of usable space is $333/sq ft.

This is the fault of the city council and the voters, not the developers. The land use laws and regulations in Seattle have artificially restricted the supply of developable land, resulting in higher prices.

If the City wants developers to build projects for lower income residents, they should upzone more of Seattle. A massive upzone would result in lower prices for multi-family zoned land and would increase the perceived risk of holding undeveloped multi-family zoned land (providing the incentive for faster development).

Given the development cost of a high rise, is it even realistic to expect “affordable” downtown condos? Escala is asking in the ballpark of $400/sq ft for the 2 BR condos, what’s the lowest cost one could really expect? $300?

It should be noted that $/sf isn’t terribly useful when looking at “affordable”. If you need 3,000 sf, the only “affordable”* home you’ll find is in the middle of nowhere. Want something close to affordable downtown right next to your work? Consider settling for (much) less.

I have an uncle that loves his life in Manhattan. He makes very little off his three careers as a part-time professor, obscure author, and part-time bartender, but enough to afford the 150sf apartment he’s lived in for 30+ years. Yet I’ll bet it costs more than $300/sf! (that would be $45k)

Argh, good call. I totally forgot to include HOA dues. I have updated the post to include monthly HOA costs, which pushes the minimum income needed to afford even the cheapest 2-bedroom condo downtown to well over $100,000.

Granted these may be hyper-inflated intangible costs to pay for one’s own little volume of Seattle Inner City Air. But high Seattle incomes are capable of supporting these market rates. Two downtown professionals, say two six-figure techies, could do this. Just a fancier version of living hand-to-mouth in a college dorm… cool and easy. Would that be financially wise? No. Doesn’t mean the market can’t bear it though. Income gaps are widening. Amazon means business. Who wants to live in a yucky old house with a whole 8000 sqft lot to maintain anymore? [facetious home owner here…]

I think most people you ask would consider that part of downtown, including Seattle’s department of planning (this property is zoned Downtown Mixed Residential/Commercial and part of the Downtown Urban Center).

I noticed your affordability calculator doesn’t factor in commute. This is a very significant oversimplification, as a long-distance commute can cost you half a million dollars over the life of a mortgage. Considering these residents may not need a car at all, that changes the calculation.

My point wasn’t that it would bump it to affordable but just quoting the median household income is a misnomer. That often doesn’t reflect most homebuyers. The typical homebuyer is a family household not a nonfamily household. This was the closest data I could find that agrigates out non family households. I was calling that out.

I think these are interesting points. Often times it’s worth it to calculate the affordability of “house + car” or even “house + 2 cars”. When you do that, places like NYC, Boston, or DC/Arlington (as opposed to suburbs) look much more affordable, which explains why people are willing to pay more for housing. But Seattle doesn’t quite have the density of those places, and downtown doesn’t have a monopoly on locations where that style of living is possible. If you’re willing/able to tolerate longer commutes, you can live in a number of neighborhoods and get a lot of benefits of walkability & reduced transportation costs.

You said 150 sf in your comment #9. Did you mean 450 sf? I’ve seen a few 400 sf to 450 sf units in Downtown and at Green Lake, but they look more like “a place to hang your hat”, and for people who spend the majority of their time not in the apartment. 600 sf to 650 sf would be more considered a reasonable minimum IMO.

“More than anything that’s for sale right now? Yikes. One of the biggest criticisms of the current batch of condos has been that the developers are only catering to the luxury market. If you’re a middle-class family hoping to live downtown, as far as developers care, you can take a hike.”

I think it is great that these condos will priced at these lofty prices. It can do nothing but help the prices of homes and condos in and around Seattle which have taken a major hit over the past number of years. Furthermore – rich folks living in the downtown area are going to improve the downtown area experience for all of us.

This is America – if you build a condo that sells for lots of bucks, and they come – more power to the builders.

I think it is great that these condos will priced at these lofty prices. It can do nothing but help the prices of homes and condos in and around Seattle which have taken a major hit over the past number of years.

I have seen a lender use Transportation Costs as part of the approval process, but that was on a VA Loan where they have in the past done a “residual income” test for borrowers to qualify. Not sure if they still do that, but if and when they will often look at budget items not normally associated with the loan process if it is a Conventional or FHA vs VA Loan.

Weren’t there some very tiny condos planned back in about 2007 in the area of Westlake and Denny? I don’t know if they were ever built, but I remember thinking they were only about the size of my truck.

Actually there are benefits to a steadily increasing home value model. I have seen a few communities where the prices were controlled to be not able to increase by more than x% per year, and no one ever paid a dime for improvements to those properties.

The % increase cap was much lower than the general market appreciation for the area. Owners felt that if their homes would go up by 8% (as I recall that was the annual cap) per year whether they improved it or let it rot from deferred maintenance, they might as well spend their money on other things.

A neighborhood with no hope of higher values can often get run down pretty fast.

How do higher home values help me as a homeowner? When I sell it, I don’t really care to live in a cardboard box. All high home values do is leave less money on the table for other important things, such as retirement, a new business, rainy day fund, education, or whatever.

My wife and lived in a 500 sf 1 bedroom apartment in Ballard before we bought our home. I actually look back with nostalgia now. If it were a studio I could see a 350-400 sf totally doable even for a couple especially if your lifestyle isn’t home-centric. My brother and his now ex-wife had a apartment in Spanish Harlem on Manhattan Island that was a spacious 325 sf. Its all relate.

High home prices hurt when you’re first entering the market, but help when exiting. I had a neighbor who just sold her house next door after owning it for 23 years. It pretty much was her retirement. Likewise, my in-laws retired and sold their place in Berkeley, CA and bought a place in rural Washington. Their house pretty much was their retirement too. High prices help some and hurt others. Low prices hurt some and help others. Its not a clear cut answer.

RE:Tim McB @ 37 The classic ‘cash out and downsize’ does happen, but I think this is largely a myth. As someone who lives in a rural county, I can say that when people like your in-laws move in, it does have an effect on home affordability for the rest of us. I am not complaining, that is the free market, but what is great for your in-laws is not so great for those trying to afford a home with their typically lower rural wages.

Thank goodness down town can start to be developed, and some one has stepped in. Seattle is a tough place to get anything decent approved.

What’s going to happen, if it is allowed to happen, and our City Coucil can stay out of the way, is we will see more luxury properties developed down town Seattle. There is a lot to do, and I hope it can stay cohesive, but there are acres to develop for high income residence.

We already have a ton of middle class housing units that did sell for obscene amounts of money. All of the oulying areas, like Ballard, and Fremont have already been filled in. If some one really wants to live in the middle of nowhere they have lots of options.

The price of the outlying areas will continue to decline while buyers with means move into a lifestyle that Seattle currently lacks.

RE:wreckingbull @ 39 – Look to the bright side…think about all the property taxes those units will create. There may be so much money pouring in that the county will lower taxes on the rest of us poor slobs! ;0)

Speaking of “dirty secrets” that the EPA seems to be sweeping under the rug in 2010 and 2011 in the name of “Super Tankers” world trade spewing pollutants into Seattle’s waterfront air; the data is masked [look it up, its blank]. Years ago I saw the arsenic concentrations in newspapers in King County….let’s put it this way, the closer to the waterfront the worse it gets from what I saw mapped out. And yes, the arsenic in King County exceeds the “safe” threshold too. You might want to glass in your deck on the waterfront and filter the air, unless you’re the “trusting sort”.

The arsenic comment is interesting. I’d like to see results of some soil tests from around the region.

The 50 million cars claim seems pretty ridiculous and needs to be backed by credible data. A car burns 2-4 gallons per hour (let’s call it an average of 3). Do you really think a ship burns 150 million gallons per hour? Can it even hold that much?

“moda” condos at 2312 3rd ave (which subsequently converted to apartments post bubble) had units as small as 250sqft. I live 3 blocks away and notice some of the buildings lower balcony railings are often stolen during the night… Good money in Scrap metal I guess?:)

I think most people you ask would consider that part of downtown, including Seattle’s department of planning (this property is zoned Downtown Mixed Residential/Commercial and part of the Downtown Urban Center).

DaveO,
You will never make a good bubble poster with that attitude. Consider: Although I am above the median, I don’t even want to live downtown, (wipes tear) – I just want to live in li’l ol’ NE Seattle (defined here as Broadmoor). But they want over $1MM for everything there – well, ok, one place for $849; but it’s crap. How do they expect to make a go of it when they exclude even the moderately above 72nd percentile? Plus, don’t they realize median householders like to play golf too? Those people better get their sh*t together!

RE:Macro Investor @ 44 – I didn’t even want to read software “engineer’s” link, but as a real engineer, I appreciate your post. Without knowing very much about cargo ships (which I don’t), I can tell you that: Simple estimation can get you a long way.

150 million gallons weighs in the ballpark of 1 billion pounds. Look at one of the regular size (40-ft) containers on the back of any truck driving around and you’ll see max gross weight abound 60,000 lb or so. That is the weight limit based on the container’s structure, so many will not weigh close to this (bulked out, but not near the wt. limit). Just divide and you see that one hour’s fuel burn is the weight of 15,000 maxed out containers? ! ? NOT.

You’ve got to give me a break at this point, Huff post writer (or whoever came up with the 50 million to 1 ratio). The biggest of these ships only hold 5,000 or so containers just to give an idea. Anyway, that ratio must be off by close to three orders of magnitude, probably on the higher side of 3 orders. For the benefit of software people (excuse me “engineers?”) that means 1000 x or so.

Nothing to do with housing here, so sorry about that. Numbers do matter when you’d like to sort out the bull-golly from the facts.

“moda” condos at 2312 3rd ave (which subsequently converted to apartments post bubble) had units as small as 250sqft. I live 3 blocks away and notice some of the buildings lower balcony railings are often stolen during the night… Good money in Scrap metal I guess?:)

Thanks, that sounds about right, although the location is different.

From memory I think my condo was about 680 square feet. That was fine for two people. I think more than square footage is important though. I don’t like those narrow townhouses where each floor is long and skinny.

With the price of land in the area we’re talking about for condo (not Broadmore), I wonder how cheap a newly built 1,000 foot condo could be with the builder making a profit, assuming the same total square footage of building. If I had to guess, the amenities of the structure probably add less to the monthly cost of living there than the amenities of the condo association.

RE:Mel Torme @ 49 I have no interest in getting in a pissing match about engineering credentials, but I think your analysis is way off base. The article is not comparing fuel burn, it is comparing emissions.

Ships burn dirty bunker oil, in very large engines, with no emissions systems. Automobiles burn gasoline and ULSD diesel, with advanced emission controls. In fact, newer automotive and truck diesels use particulate filters and urea treatment systems, which for *some* pollutants, means the exhaust gasses are even cleaner than the ambient air. The emission of particulates and SO2 per gallon is absolutely different by several orders of magnitude, which I believe to be the point of the article.

RE:wreckingbull @ 52 – You might also reference the emissions savings of some of the cruise ships when in port. Some can now plug into electricity from the dock, and I think some now have NG turbines for use in port. And testing my memory further, I think some use a cleaner form of diesel when near ports.

RE:wreckingbull @ 52 – Well, that’s what I get for not reading the article and just going off of what Macro Investor said (I really did not want to go over to the Daily Kos post to read anything). My post was simply about a quick estimation of fuel burn of one of those big cargo ships, so I apologize for a misinterpretation, since the original article probably did write about pollution emissions, not just fuel burn. (I thought Macro was just repeating a ratio of ship fuel burn vs. cars)

I agree that the ship fuel can be pretty dirty. There’s actually some real pollution coming from the high-sulfur diesel, as opposed to the “emissions” of a normal component of the atmosphere called carbon dioxide.

I still can’t deal with a software person calling himself an engineer, which is why s.e. gets the down arrows from me.

Anyway, apologies wrecking-bull, I should have read the article somewhere before commenting (or at least the link name – I only got thru http:\www.dailykos … before my instincts took over and said “don’t do it”.)

I think our downtown core has suffered by this lack of development. Some one mentioned Moda which is a perfect example of what we ended up with when you take more expensive luxury projects out of the mix. Moda was developed by a Real Estate agent who is still doing spot lots around the city. I think we had Murray Franklin as the fill in developer for places like Crystalla, an others.

Our City Council wanted to keep larger developers, like Martin Selig, from making our downtown core a glass and steel series of connected canyons.

Well we now have tons of open space requirements, and possibly a set of rules in place that will make sense for both the city, and developer.

We are the only city that I have ever been in that discouraged development, and had one person, Paul Allen, in charge of any or all large scale projects.

As far as the double dip, or if these projects will sell, I hope the developer is looking at a higher end set of buyers.

Second, I would tend to agree with you. I’m not sure what the reason is, but if you compare downtown Seattle to downtown Vancouver BC, Seattle is pathetic. Both in architecture and the activity of the people which make up the neighborhood.

Tim, it’s not necessary for the middle class to live downtown. The middle class is perfectly comfortable to live in their pressboard shacks next to the interstate highways we built for them, eating the food we process for them, and driving the crossover SUVs we commissioned to be built in Mexico for them.

The middle class, frankly, shouldn’t be living in downtown. Without a Costco, an Applebee’s, or a Cinnabon, they wouldn’t know what to do there anyway.

Given the increase in construction one has to assume that either there is a mass migration of rich people to Seattle…OR downtown real estate is being used as a “bank”…with people hoping to buy and have it appreciate and hold value like back in the old days.

In that case one has to assume a large and foolish supply of international rich people who have no idea what downtown Seattle is like and will be taken for ride.

Nope. I meant 150sf. It’s hard for some people to imagine, but a small and simple home can be liberating. Why spend time and effort on shopping and making dinner when you’re surrounded by great restaurants? Why store, say, ski equipment when you can rent? Etc.

There’s a developer that speciallizes in this stuff right here in Seattle. Check out Apodment.com. They start at 100sf, and at $350/month, furnished (bed, table, chair, refrigerator), including utilities and wifi. There’s 11 properties total. And they’re all in walkable areas where you don’t even need a car. Click through the pictures at Solana for an example of what this kind of life looks like (shiny new, at $495/mo). Or check out the floorplan at Vedere – the smallest unit is 90sf.

I’d call $500/mo, with no car, affordable for almost any income bracket.

Nope. I meant 150sf. It’s hard for some people to imagine, but a small and simple home can be liberating. Why spend time and effort on shopping and making dinner when you’re surrounded by great restaurants? Why store, say, ski equipment when you can rent? Etc.

There’s a developer that speciallizes in this stuff right here in Seattle. Check out Apodment.com. They start at 100sf, and at $350/month, furnished (bed, table, chair, refrigerator), including utilities and wifi. There’s 11 properties total. And they’re all in walkable areas where you don’t even need a car. Click through the pictures at Solana for an example of what this kind of life looks like (shiny new, at $495/mo). Or check out the floorplan at Vedere – the smallest unit is 90sf.

I’d call $500/mo, with no car, affordable for almost any income bracket.

RE:Matt the Engineer @ 64 I think these are pretty cool. My main concern is that life in these would resemble life in my college fraternity house or an Amsterdam travel hostel. This is great if you are 21 and work as a bartender, but what about those of us that prefer a little peace during the work week? Do you have any sense of the people that live in these spaces?

By Macro Investor @ 44The arsenic comment is interesting. I’d like to see results of some soil tests from around the region.

The 50 million cars claim seems pretty ridiculous and needs to be backed by credible data. A car burns 2-4 gallons per hour (let’s call it an average of 3). Do you really think a ship burns 150 million gallons per hour? Can it even hold that much?

You’re focusing too much on the numerator (the cargo ship) here. The denominator, the automobile, emits almost no sulfur byproducts anymore because EPA (and the European, Japanese, and other equivalents) mandated that refiners remove the sulfur. Domestic gasoline has 30ppm maximums and I think most refiners are closer to 0 than they are to 30. On-highway diesel is limited to 15ppm now. Automotive emissions (sulfates and nitrates) have been nearly wiped out, and combined with tougher restrictions on coal plants, is why it’s not as smoggy in LA and why we don’t get acid rain in the Northeast US anymore.

That said, the emissions from nautical vessels is an issue. But there’s no enforcement mechanism. Once you’re in international waters it’s borderline impossible to get anyone to agree to anything, especially since so many vessels register in countries with barely-functioning governments.

My main concern is that life in these would resemble life in my college fraternity house or an Amsterdam travel hostel. This is great if you are 21 and work as a bartender, but what about those of us that prefer a little peace during the work week? Do you have any sense of the people that live in these spaces?

I haven’t met anyone in the Seattle Apodments, but again – my uncle loves his little Manhattan apartment. I have a feeling those that want peace and quiet will keep living far from the city, and pay in commute hours.

The most fun I’ve had in my life was in college dorms. Those on my floor were like family, and life was a roaming party from room to room.

The most productive I’ve been in work life was in small cubicles, with each of us yelling out questions and answers (or jokes, or just chatting).

The best cities I’ve visited had tiny homes, offices, and shops, all existing on pedestrian roads.

The least fun I’ve had was living in a suburban home with an hour commute each way.

Peace and quiet are valuable for some. It’s lower on my list than commute, convenience, or community. I fully expect to live in an Apodment when my wife throws me out someday ;-)

I think the idea is very cool…and I love that last line in your comment. But it reminds me of a kid I saw who set up his “home” in a storage shed. Kinda cool…but a little sad at the same time. At 150 sf it might make more sense to convert someone’s 1 car garage. They are usually at least 220 sf. :)

Which middle class families work downtown that can afford a 2bd house in north central seattle or capitol hill/madison park? It’s unfortunate that Seattle has the best job market on the planet for tech skilled employment? What’s unfortunate is that our short sighted populace didn’t take Paul Allen up on his offer for a south lake union park. What’s unfortunate is that we elect “Maggie Fimia” politicians who cannot see what is going to happen whether we want it to or not. We’ve needed poliiticians to steer our community toward the best outcomes of those eventualities instead of resisting the inevitable. i.e. our public transportation debacle for the last 30+ years.

Tim, you’ve complained about the Seattle real estate market for years now and what has it accomplished? Maybe it’s time to acutally be part of a green, low income housing initiative. that purchases small parcels of land zoned for high density and develops them. Housing that developers can get behind because they make good incomes by offsetting expense with solar, passive geothermal, LEED construction, ect. Maybe you can start a movement to get our state / federal government to offer subsidies for that development and ongoing ownership.